FR Doc 2010-27395
[Federal Register: October 29, 2010 (Volume 75, Number 209)]
[Rules and Regulations]
[Page 66665-66677]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29oc10-10]
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DEPARTMENT OF EDUCATION
34 CFR Part 600
RIN 1840-AD04
[Docket ID ED-2010-OPE-0012]
Program Integrity: Gainful Employment--New Programs
AGENCY: Office of Postsecondary Education, Department of Education.
ACTION: Final regulations.
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SUMMARY: The Secretary amends the regulations for Institutional
Eligibility Under the Higher Education Act of 1965, as amended (HEA),
to establish a process under which an institution applies for approval
to offer an educational program that leads to gainful employment in a
recognized occupation.
DATES: These regulations are effective July 1, 2011. However, affected
parties do not have to comply with the information collection
requirements in Sec. 600.20(d) until the Department of Education
publishes in the Federal Register the control number assigned by the
Office of Management and Budget (OMB) to these information collection
requirements. Publication of the control number notifies the public
that OMB has approved these information collection requirements under
the Paperwork Reduction Act of 1995.
FOR FURTHER INFORMATION CONTACT: John Kolotos or Fred Sellers.
Telephone: (202) 502-7762 or (202) 502-7502, or via the Internet at:
John.Kolotos@ed.gov or Fred.Sellers@ed.gov.
If you use a telecommunications device for the deaf (TDD), call the
Federal Relay Service (FRS), toll free, at 1-800-877-8339.
Individuals with disabilities can obtain this document in an
accessible format (e.g., braille, large print, audiotape, or computer
diskette) on request to one of the contact persons listed under FOR
FURTHER INFORMATION CONTACT.
SUPPLEMENTARY INFORMATION: On July 26, 2010, the Secretary published a
notice of proposed rulemaking (NPRM) for gainful employment issues in
the Federal Register (75 FR 43616).
In the preamble to the NPRM, the Secretary discussed on pages 43617
through 43624 the major regulations proposed in that document to
establish measures for determining whether certain programs lead to
gainful employment in recognized occupations and the conditions under
which those programs remain eligible for title IV, HEA program funds.
In these final regulations, we address in a limited way only one issue
from the proposed regulations: The provisions relating to the
Secretary's approval of additional programs. The remaining issues will
be addressed in final regulations that we intend to publish in the next
few months.
Implementation Date of These Regulations
Section 482(c) of the HEA requires that regulations affecting
programs under title IV of the HEA be published in final form by
November 1 prior to the start of the award year (July 1) to which they
apply. However, that section also permits the Secretary to designate
any regulation as one that an entity subject to the regulation may
choose to implement earlier and to specify the conditions under which
the entity may implement the provisions early.
The Secretary has not designated any of the provisions in these
final regulations for early implementation.
Analysis of Comments and Changes
These final regulations were developed through the use of
negotiated rulemaking. Section 492 of the HEA requires that, before
publishing any proposed regulations to implement programs under title
IV of the HEA, the Secretary must obtain public involvement in the
development of the proposed regulations. After obtaining advice and
recommendations, the Secretary must conduct a negotiated rulemaking
process to develop the proposed regulations. The negotiated rulemaking
committee did not reach
[[Page 66666]]
consensus on the proposed regulations that were published on July 26,
2010. The Secretary invited comments on the proposed regulations by
September 9, 2010.
Over 90,000 parties submitted comments, many of which were
substantially similar. Of those comments several hundred pertained to
the regulations in proposed Sec. 668.7(g) regarding institutions'
applications for and the Secretary's approval of additional programs.
We have reviewed all of the comments related to this specific
provision. In the following section we address those comments in the
context of the limited nature of the changes we are making in these
final regulations. Our analysis and the changes we are making in these
regulations regarding additional programs follow.
Generally, we do not address minor, nonsubstantive changes,
recommended changes that the law does not authorize the Secretary to
make, or comments pertaining to operational processes. We also do not
address comments pertaining to issues that do not relate to the
additional programs provision or were not within the scope of the NPRM.
Additional Programs (Sec. Sec. 600.10 and 600.20)
Comments: Several commenters generally supported the employer
affirmation provisions in proposed Sec. 668.7(g)(1)(iii), but made
several recommendations. First, the commenters recommended that
employers should specify the location of the anticipated job vacancies
because pursuing a job across the country may be a reasonable choice
for a graduate with a degree that provides training for a high-paying
profession, but unreasonable for a graduate with a certificate or
degree that provides training for a low-paying occupation. Second, the
commenters stated that regulations should require the employer to
identify for the employer's business the number of current or expected
job vacancies and whether those vacancies are for full-time, part-time,
or temporary jobs. Third, the commenters stated that the Department
should specify that the affirmations apply to time periods related to
the length of the program. For example, the affirmations for a new
eight-month program should cover the period after the first group of
students completes that program. Fourth, the commenters asked that the
regulations be revised to prohibit an employer from providing an
affirmation to several different institutions if the employer does not
have jobs for graduates from all of those institutions. Finally, to
ensure that employer affirmations are clear and uniform, the commenters
presented a model form detailing the information an employer would
provide for these purposes.
With regard to the remaining provisions in proposed Sec. 668.7(g),
some of the commenters suggested that any provisions limiting the
establishment of new programs apply only to institutions whose programs
are currently restricted or determined in the previous three years to
be ineligible. The commenters believed this approach would provide a
stronger incentive for institutions to keep their programs fully
eligible and reduce the burden on institutions that have a strong
record of preparing students for gainful employment.
Other commenters acknowledged the criticism that employer
affirmations and attestations are often pro forma, but supported the
regulations because seeking affirmation of demand could lead to closer
connections with employers. The commenters recommended that
institutions include, as part of the affirmation process, the number of
students hired by an employer who attended a program and the percentage
of students hired by the employer who completed that program.
Some commenters stated that the provisions in proposed Sec.
668.7(g) place significant limitations on a cosmetology school's
ability to grow and meet the demands of employers, which include not
only positions in salons and spas, but also in marketing, distribution,
and sales. The commenters were particularly concerned about how the
Department would use five-year enrollment projections and employer
affirmations in determining whether to approve a program or limit its
growth. The commenters argued that if growth limitations are determined
based on an institution's ability to document national and regional
demand through employer affirmations, it would be unfair and
unrealistic for the Department to rely only on affirmations from
nonaffiliated employers. According to the commenters, many institutions
work closely with salon owners and cosmetics manufacturers and
distributors, and in some cases school owners have separate businesses
making them affiliated employers. In addition, relying solely on
nonaffiliated affirmations would eliminate one of the primary uses of
program integrity boards which are designed to work in collaboration
with institutions on the continued development and refinement of
program expectations. The commenters believed that precluding
affirmations from these sources is not only at cross-purposes with
common business practices but also with guidance under other statutes,
such as the Workforce Investment Act. The commenters concluded that the
Department should withdraw or significantly revise the regulations to
return the primary responsibility for aligning curricula with job
demand back to accrediting agencies and States.
A number of commenters stated that the regulations for additional
programs in proposed Sec. 668.7(g) would hamper an institution's
ability to develop, roll out, adapt, and improve new educational
programs. For example, an institution that is developing a technical
training program related to alternative fuels and green technologies
would not be able to demonstrate projected job vacancies or expected
demand, and it would be virtually impossible for such an employer to
affirm that the program's curriculum aligns with recognized
occupations. In addition, the commenters stated that the regulations
were too vague and lacked clarity in key areas. Some of the commenters
asked the Department to clarify or explain the following:
In what ways the Department would consider employers
qualified to determine educational quality or appropriate content of
educational programs? The commenters contend that employers are not
qualified to make these determinations.
What would constitute a local employer when education is
delivered through an online medium? The commenters believe that any
national employer should suffice.
What is an affiliated employer? Some commenters suggested
that the institution may not have an ownership stake in the employer
but may have a relationship with the employer along the lines of
providing internships and externships to current and graduated
students. Other commenters noted that an institution may have
relationships or partnership arrangements with manufacturers, dealers,
or other businesses and questioned whether these arrangements would
preclude these businesses from providing affirmations.
How many employer affirmations are needed and what is the
extent of the required documentation?
What criteria will be used to accept or reject a new
program? If a program becomes ineligible under proposed Sec. 668.7(f)
but in a subsequent year satisfies the gainful employment provisions,
would the program be treated as a new program under proposed Sec.
668.7(g)?
What are the metrics that would be used to align the size
of the employers'
[[Page 66667]]
projected needs to the size of the program? Would an institution be
required to obtain affirmations from employers proximate to each
location at which a program is offered? In this case, will program
approvals be location-specific or will an institution continue to be
able to offer a program at its additional locations under the same
Program Participation Agreement?
How does the Department want institutions to determine
projected enrollment and how will the Department use enrollment
projections? Will an institution be able to update its enrollment
projections?
Other commenters believed that enrollment projections have no
bearing on whether a program provides gainful employment. Some of the
commenters argued that rather than the Department attempting to control
the number of individuals entering an occupation by limiting the number
of students who enroll in a particular program, students should have
the option of choosing a program so long as the program satisfies the
standards of quality established by an accrediting agency. The
commenters believed that the Department should not attempt to exert
control over the educational options available to students in any
capacity that exceeds ensuring program quality. In addition, the
commenters objected to obtaining affirmations from nonaffiliated
employers, particularly for online and graduate-level programs. With
respect to online programs, the commenters contended that it would be
overly burdensome to obtain affirmations from employers all over the
country. With regard to graduate programs at institutions where most of
the students enrolled in these programs are employed full-time, the
commenters opined that employer affirmations are unnecessary because
students taking these programs to advance their careers already
understand the employment demands in their field. The commenters also
believed that because section 496 of the HEA mandates that an
accrediting agency may not be recognized by the Department unless the
agency monitors the growth of programs at institutions that are
experiencing significant enrollment growth, accrediting agencies are in
a much better position than the Department to assess the impact of
growth on an institution's operations and whether that growth impacts
educational quality.
Another commenter asserted that the proposed additional program
requirements violate 20 U.S.C. 1232a, which limits the amount of
control or oversight that the Department may exercise over program
curricula and other internal decisions made by schools. Moreover, the
commenter believed that the HEA does not give the Department any
authority to restrict a title IV, HEA program because the Department
predicts it will be difficult for program graduates to secure
employment.
One commenter asserted that neither the Department nor employers
should be able to control new programs. Rather, the commenter said that
programs should be allowed to prove their worth over time. The
commenter concluded that innovation and growth will be severely
hindered because the proposed regulations prejudge the efficacy of, and
market for, new programs.
Many commenters opined that the Department should rely on data from
the U.S. Department of Labor's Bureau of Labor Statistics (BLS),
instead of employer affirmations, to evaluate expected demand for an
additional program. The commenters argued that one benefit of using BLS
data is that an institution has access to the data and can confirm the
need for new programs before expending substantial funds to develop the
programs. In addition, the commenters stated that the Department would
receive an endless number of appeals if it determined the eligibility
of programs through ad hoc employer recommendations and decisions by
Department employees who lack expertise in the labor markets. The
commenters recommended that the Department establish a process under
which an institution could appeal a decision denying the eligibility of
a new program, where the decision maker would have substantial
expertise in curriculum development and analyzing labor trends and
occupational needs.
A commenter stated that the proposed approval process for new
programs was unfair and cumbersome and should be eliminated.
Nevertheless, the commenter suggested that institutions offering new
programs provide some form of expanded notice to the Department or the
proposed process should be modified to apply only to an institution
where over 50 percent of its programs are on a restricted status.
Several commenters believed the proposed approval process for new
programs is costly, redundant, and unnecessary. Some of the commenters
stated that State and accrediting agencies already require approval of
new programs and reinforced that view by claiming that provisions in
the NPRM that the Department published on June 18, 2010 (75 FR 34806)
would expand State oversight. The commenters stated that one
institution alone implemented scores of new programs over the last year
and questioned how the Department would be able to review efficiently
the anticipated number of programs with the speed required for
institutions to function effectively. The commenters opined that
requiring employer affirmations does not fall within any reasonable
understanding of the statutory requirements that programs prepare
students for gainful employment. Moreover, because the proposed
regulations do not adequately explain how the process for employer
affirmations will be conducted, how the Department would review and
verify the affirmations, or how the Department will determine that a
program is acceptable, the regulations would leave the Department with
vague, arbitrary, and ultimate power to approve or deny a program. The
commenters concluded that the Department would be the arbiter of
program offerings, which would result in a system that does not best
serve students or the national economic interests. Another commenter
believed that employer affirmations are not needed because job
vacancies in any market can be obtained easily online.
Another commenter opined that it is infeasible to obtain employer
affirmations because no employer would affirm job openings for a
specific number of a program's graduates. According to the commenter,
doing so could amount to a commitment to hire and employers would not
expose themselves to that liability. In addition, an employer's ability
to foresee demand is limited and governed by economic conditions over
which the employer has little or no control. The commenters concluded
that requiring employer affirmations would effectively ban new programs
leading to gainful employment. In addition, the commenters contended
that the Department does not have the authority to impose such
requirements.
Some commenters argued that because postbaccalaureate degree and
certificate programs enable an individual to refine his or her
expertise or obtain a specialization associated with a recognized
occupation, the programs are not necessarily intended to train
individuals to move into the job market or a basic career field.
Therefore, according to the commenters, these programs should be
excluded from the regulations. Along the same lines, other commenters
suggested excluding graduate programs from the regulations because many
students in these programs are working adults seeking to advance their
careers. Alternatively, one of the commenters suggested that the
Department consider exempting from
[[Page 66668]]
these regulations institutions with a history of low default rates.
One commenter believed that the number of program approvals,
estimated in the NPRM at 650 over the first 3 years, is vastly
underestimated. Based on the approvals that would be required at the
commenter's institution, the commenter estimated that 6,000 or more
would occur over that timeframe, presenting an unworkable burden to the
Department. The commenter suggested that the Department use a different
mechanism to address concerns that institutions may attempt to
circumvent the regulations by renaming existing programs or by other
means. At a minimum, the commenter recommended that institutions be
allowed to bypass Department approval entirely if (1) BLS data show a
demand in the region where the new program will be offered, or (2)
programs representing 50 percent or more of the institution's total
enrollment or programs representing 50 percent of its enrollment in the
same job family, are not restricted or ineligible, or (3) the State in
which the program will be offered requires a demand assessment.
Some commenters requested that programs training alternative oral
health workforce professionals be exempted from the regulations. The
commenters explained that to address access to oral health care, States
and national organizations have implemented programs that create new
members of the dental team. Some of these new workforce models require
the completion of a degree program while others require the completion
of a certificate program. Because these are new programs, it would be
difficult to project growth in coming years. In addition, because these
new workforce models aim to serve a constituency that has historically
faced barriers to oral health care, prospective employers may not be in
a position to adequately gauge the need for these new practitioners.
The Children's Health Insurance Program Reauthorization Act, Public Law
111-3, requires the GAO to conduct a study and report on issues
pertaining to the oral health of children, including ``the feasibility
and appropriateness of using qualified mid-level dental health
practitioners, in coordination with dentists, to improve access for
children to oral health services and public health overall.'' In
addition, the Affordable Care Act, Public Law 111-148, authorized an
alternative dental health provider demonstration project grant program
for States. The commenters concluded that it would be contradictory for
the Federal Government to provide funding to a State to create a
program for a new oral health professional, and then deny prospective
students access to title IV, HEA loans to matriculate in the program.
Another commenter suggested that the Department apply the two-year
rule used for new institutions (a new institution must operate for two
years before it applies to participate in the title IV, HEA programs)
to institutions where a change in control results in control vested in
a person or organization that does not have previous experience in
administering the title IV, HEA programs. Under this approach, title
IV, HEA funds would be capped at prechange levels for two years until
the Department conducts a program review to assure that no substantial
change in mission or educational outcomes has occurred as a result of
the change in control. The commenter believed this approach would
mitigate potential misalignment of the interests of a new owner and the
educational and career expectations of the institution's students.
Many commenters noted that workforce education programs offered by
community colleges and technical colleges are designed to meet local
market needs. The commenters stated that as public institutions, these
colleges undergo thorough oversight before adding new programs,
including the use of business advisory committees. In addition, board,
public agency, accrediting agency, and State approval is often
required. Although the commenters believed that the additional
regulations may be appropriate for some institutions, in their view the
regulations are redundant and unnecessary for community colleges in
light of this oversight and approval process.
Several commenters suggested that, to avoid confusion, the
provisions in proposed Sec. 668.7(g) belong more appropriately in
Sec. 600.10(c,) which currently addresses the approval of additional
programs. The commenters recommended retaining the exception in Sec.
600.10(c)(2), which allows an institution to add a program without
obtaining approval from the Department if the program leads to a degree
or prepares students for gainful employment in the same or related
occupation as a program previously approved by the Department. The
commenters believed that this exception should continue to apply so
long as the previously approved program is not in a restricted status,
as proposed under proposed Sec. 668.7(e), or is not subject to debt
warning disclosures under proposed Sec. 668.7(d). In addition, the
commenters believed that it would be impracticable for an institution
to make the five-year enrollment projections under proposed Sec.
668.7(g)(1)(ii), but did not offer any alternatives.
Some commenters expressed concern that the approval process for
additional programs places a high burden of proof on institutions and
would hamper the ability of colleges to respond to new and emerging
workforce needs. In addition, the commenters requested that the
Department clarify how the program approval requirements in proposed
Sec. 668.7(g) would apply to programs that institutions may now offer
without approval under current Sec. 600.10(c)(2). As noted previously,
under that section an institution is not currently required to obtain
the Department's approval of an additional program if the program leads
to a degree or prepares students for gainful employment in the same or
related occupation as a program previously approved by the Department.
The commenters recommended that any expanded approval process apply
only in cases where there is a record of poor performance sufficient to
justify additional oversight. Along the same lines, other commenters
recommended that any approval process for new programs should apply
only to institutions with programs in a restricted or ineligible
status.
Discussion: As a threshold matter, we disagree that the review and
approval of an application from an institution to offer a new program
is prohibited by 20 U.S.C. 1232a. That provision prevents the
Department from exercising control over the content of a curriculum,
program, or personnel at an institution. The HEA establishes
requirements for institutions and programs to be eligible to
participate in the title IV, HEA student financial aid programs, and
the Department is charged with the responsibility to ensure that
institutions participating in these programs have the financial
strength and administrative capability needed to do so. In this
context, the Department proposed in the NPRM and establishes in these
final regulations a requirement that an institution must notify the
Department of its intent to offer a new program and if necessary obtain
the Department's approval to add a new program that is subject to the
gainful employment regulations. Such review and approval do not
constitute exercising control over the substance of the curriculum for
that program, but rather involve a review of the institution and the
institution's decision to offer a particular program. Furthermore,
regardless of the Department's determination of a program's title IV,
HEA program
[[Page 66669]]
eligibility, nothing under the HEA would prevent any institution from
offering an ineligible program for which students would receive no
title IV, HEA program assistance.
In general, we agree with the commenters who suggested that the
program approval process for additional programs should apply, in some
way, only to an institution with programs in a restricted or ineligible
status or otherwise be based on the performance of the institution's
gainful employment programs. This more focused approval process would
not only reduce burden on institutions and the Department, but would
enable institutions with good performance records to offer new programs
more expediently. However, as noted in the SUPPLEMENTARY INFORMATION
section of the preamble, these final regulations do not address the
standards that will be used to gauge the performance of gainful
employment programs and the consequences of not meeting those standards
over time. Therefore, in these final regulations, the Department is
establishing in Sec. 600.20(d) requirements intended to remain in
place until performance based standards can be implemented for
approving additional programs using gainful employment measures along
the lines suggested by the commenters.
Under these requirements that go into effect on July 1, 2011, the
Department does not require employer affirmations or enrollment
projections before approving a program. Instead, the Department will
rely on a notice from the institution, submitted at least 90 days prior
to the time when the institution plans to offer the new program, that
provides a narrative explanation of why and how the new program was
developed. Specifically, an institution must describe how it determined
the need for the new program and how the program was designed to meet
local market needs, or for an online program, regional or national
market needs by, for example, consulting BLS data or State labor data
systems or consulting with State workforce agencies. The institution
also must describe how the program was reviewed or approved by, or
developed in conjunction with, business advisory committees, program
integrity boards, public or private oversight or regulatory agencies,
and businesses that would likely employ graduates of the program.
Additionally, the institution must include in its notice documentation
that the program has been approved by its accrediting agency or is
otherwise included in the institution's accreditation by its
accrediting agency, or comparable documentation if the institution is a
public postsecondary vocational institution approved by a recognized
State agency for the approval of public postsecondary vocational
education in lieu of accreditation. The notice from an institution
should also include any information that describes how the program
would be offered in connection with, or in response to, an initiative
by a governmental entity, such as the oral health program with the
Federal support described in the comments. Additionally, an institution
must include in its notice a description of any wage analysis it may
have performed, including any consideration of BLS wage data that is
related to the new program.
Department staff will review the notices to identify instances
where additional information may be needed about the program. Unless
otherwise required to obtain approval for the new program, an
institution that provides a notice may proceed with its plans to offer
the new program based on its determination that the program is an
eligible program that prepares students for gainful employment in a
recognized occupation. If a concern or need for additional information
about the new program is identified, the Department, under its
authority in Sec. 600.20(c)(1)(v), will send a letter to the
institution alerting it that the Department must approve the program
for title IV, HEA program purposes.
If the Department denies approval of an institution's new program,
we will explain the basis for that decision and permit the institution
to respond to our concerns and to request reconsideration of the
denial. We note that even if the new program is not yet approved or is
denied, an institution may still offer the program but students would
be ineligible to receive title IV, HEA program funds to pay the costs
of attendance associated with that program. In the case of a denial,
the institution could later seek to add the program and provide
additional information about students who completed it.
In deciding whether to seek additional information regarding a
program, the Department will assess the institution's administration of
its current programs, its capability to add the new program and provide
the additional resources associated with it, and evaluate the
institution's determination that the program should be offered. This
review includes examining (1) the institution's demonstrated financial
responsibility and administrative capability in operating existing
programs, (2) whether the additional educational program is one of
several new programs that would replace similar programs currently
offered by the institution, as opposed to supplementing or expanding
the current programs provided by the institution, (3) whether the
number of additional educational programs being added is inconsistent
with the institution's historic program offerings, growth, and
operations, and (4) the sufficiency of the institution's process and
determination to offer an additional educational program that leads to
gainful employment in a recognized occupation.
In evaluating the institution's determination, we may consult
external sources including the State, the institution's accrediting
agency, BLS, and State resources, and may contact entities identified
in the institution's notice. The Department may also require the
institution to submit other information related to the new program.
When determining whether to deny a new program, the Department will
consider factors (2) through (4) of the four factors described above.
The Department will consider any tie-in with a governmental entity as
an indication that the new program is intended to meet either current
or expected employment demands. The Department may also consider BLS
wage data related to the new program when reviewing information from an
institution.
In general, for institutions with a history of good performance
administering their programs, we believe that no approval will be
needed for new programs under these requirements. However, the
Department is concerned that some institutions might attempt to
circumvent the proposed gainful employment standards (see the July 26,
2010 NPRM, 75 FR 43638-43640) by adding new programs before those
standards would take effect. Although the proposed standards would
evaluate most programs based on past performance, newly offered
programs would not be subject to the standards for several years until
they established an operating history. For example, an institution may
seek to offer a significant number of new programs that would not be
evaluated under the new standards for up to five years as a contingency
plan in case its current programs are eliminated or restricted under
measures that would be established in the final gainful employment
regulations. We believe that such an approach by an institution should
be examined closely to determine whether those new programs are
substantially different and offer more potential benefits to its
students.
[[Page 66670]]
With these regulations, the Department intends to mitigate the
potential for this type of response by identifying such circumstances
and requiring those new programs to be approved.
We believe this approach, based on a program development process
articulated by a wide range of commenters and augmented by other
information available to the Department, will provide some assurance
that a new gainful employment program is needed at an institution and
is responsive to student and employer needs. Moreover, we believe that
these requirements correspond to the process an institution should
follow in performing its due diligence responsibilities with respect to
establishing an additional program.
The Department will continue to consider changes to these approval
requirements as part of its consideration of the remaining issues
presented in the gainful employment NPRM. Toward that end, we are
continuing to consider carefully the suggestions to exclude
postbaccalaureate certificate programs from the new program notice and
approval process and ways to provide a more flexible approach for
approving programs in new and emerging fields. In addition, we intend
to address the questions raised on employer affirmations and enrollment
projections in the subsequent final regulations for gainful employment.
Finally, we intend to implement administrative procedures that
should mitigate the burden on institutions and the Department in
submitting and reviewing notices for new programs. For example, the
Department may allow an eligible institution to combine several new
programs in one notice if the institution used the same, or similar,
processes in developing those programs. An eligible institution may
submit a notice for a new program that will be offered at multiple
locations of the institution.
With regard to the concern that the number of program approvals,
estimated in the NPRM at 650 over the first 3 years, is underestimated,
we looked at the number of new program submissions to Federal Student
Aid over the period from October 1, 2009 through September 30, 2010.
Based on this data, we determined that a better estimate was a total of
1,919 new programs annually. Thus, over a three-year period the
estimate would be 5,757 new programs. We note that the procedure in the
regulations will result in most of those new programs being offered
solely by providing notice to the Department, and that the separate
approval process will be used for a much smaller number of those new
programs.
Changes: We have revised Sec. 600.10(c), as suggested by some of
the commenters, to provide that an institution must provide at least 90
days advance notice to the Department of its plans to offer a new
educational program that leads to gainful employment in a recognized
occupation. Section 600.10(c)(1)(v) has also been revised to provide
that the Secretary may notify an institution it is required to obtain
approval for a new educational program. An institution does not have to
provide notice to add a non-gainful-employment program under this
section, except for direct assessment programs under 34 CFR 668.10 or
unless required to do so by a provision in its Program Participation
Agreement. Under revised Sec. 600.10(c)(3), an institution that is
required to obtain approval from the Department for a new program, but
does not obtain the Department's approval or that incorrectly
determines that an educational program is an eligible program for title
IV, HEA program purposes, must repay to the Secretary all HEA program
funds received by the institution for that educational program, and all
the title IV, HEA program funds received by or on behalf of students
who enrolled in that program.
We have amended Sec. 600.20(d) to specify that an institution must
provide notice at least 90 days in advance for a new educational
program that leads to gainful employment in a recognized occupation.
The notice must describe how the institution determined the need for
the program and how the program was designed to meet local market
needs, or for an online program, regional or national market needs. The
institution also must describe in the notice how the program was
reviewed or approved by, or developed in conjunction with, business
advisory committees, program integrity boards, public or private
oversight or regulatory agencies, and businesses that would likely
employ graduates of the program. Additionally, the institution must
include documentation that the program has been approved by its
accrediting agency or is otherwise included in the institution's
accreditation by its accrediting agency, or comparable documentation if
the institution is a public postsecondary vocational institution
approved by a recognized State agency for the approval of public
postsecondary vocational education in lieu of accreditation. In
addition, an institution must include in its notice a description of
any wage analysis it may have performed, including any consideration of
BLS wage data that is related to the new program. The institution must
also provide the date of the first day of class of the new program.
Section 600.20(d) also provides that the Department may require the
institution to obtain approval of the new program, and submit
additional information about it. This section also describes the
factors the Department will consider in evaluating the institution's
application and specifies that if the Department denies an application
from an institution to offer an additional program under Sec.
600.10(c), the Department will explain in the denial how the
institution failed to demonstrate the new program would likely lead to
gainful employment in a recognized occupation. The institution will be
permitted to respond to the concerns raised by the Department in the
denial and request reconsideration of the denial.
As discussed in the Paperwork Reduction Act of 1995 section of this
preamble, we have corrected the OMB control number for Sec. 600.20 to
read ``1845-0012''.
Executive Order 12866
Regulatory Impact Analysis
Under Executive Order 12866, the Secretary must determine whether
the regulatory action is ``significant'' and therefore subject to the
requirements of the Executive Order and subject to review by the OMB.
Section 3(f) of Executive Order 12866 defines a ``significant
regulatory action'' as an action likely to result in a rule that may
(1) have an annual effect on the economy of $100 million or more, or
adversely affect a sector of the economy, productivity, competition,
jobs, the environment, public health or safety, or State, local, or
tribal governments or communities in a material way (also referred to
as an ``economically significant'' rule); (2) create serious
inconsistency or otherwise interfere with an action taken or planned by
another agency; (3) materially alter the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raise novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive order.
Pursuant to the terms of the Executive order, we have determined
that this regulatory action will not have an annual effect on the
economy of more than $100 million. Therefore, this action is not
``economically significant'' and subject to OMB review under section
3(f)(1) of Executive Order 12866.
[[Page 66671]]
Notwithstanding this determination, we have assessed the potential
costs and benefits--both quantitative and qualitative--of this
regulatory action and have determined that the benefits justify the
costs.
Need for Federal Regulatory Action
Student debt is more prevalent and individual borrowers are
incurring more debt than ever before. Twenty years ago, only one in six
full-time freshmen at four-year public colleges and universities took
out a Federal student loan; now more than half do. Today, nearly two-
thirds of all graduating college seniors carry student loan debt. The
availability of Federal student aid allows students to access
postsecondary educational opportunities crucial to employment. For-
profit postsecondary education along with occupationally specific
training at other institutions has long played an important role in the
nation's system of postsecondary education. Many of the institutions
offering these programs have recently pioneered new approaches to
enrolling, teaching, and graduating students. In recent years,
enrollment in for-profit institutions has grown rapidly to 1.8 million
students, nearly tripling between 2000 and 2008. This trend is
promising and supports President Obama's goal of leading the world in
the percentage of college graduates by 2020. This goal cannot be
achieved without a healthy and productive for-profit sector of higher
education. However, the programs offered by the for-profit sector must
lead to measurable outcomes, or those programs will devalue
postsecondary credentials through oversupply.
The proposed gainful employment regulations described in the NPRM
published on July 26, 2010 received a record number of comments for a
regulation proposed by the Department. The Department expects to
publish the subsequent, final gainful employment regulations in early
2011 with an effective date of July 1, 2012. The provision related to
approval of additional programs is addressed separately in these final
regulations and will take effect on July 1, 2011. Specifically, these
regulations establish interim requirements regarding the approval of
gainful employment programs with initial enrollment beginning after
July 1, 2011.
In general, for institutions with good records administering their
programs, we believe that most new programs will satisfy these
requirements and will not need to obtain approval of their programs
from the Department. However, the Department is concerned that some
institutions might attempt to circumvent the proposed gainful
employment standards (see the July 26, 2010 NPRM, 75 FR 43638-43640) by
adding new programs before those standards would take effect. Although
the proposed standards would evaluate most programs based on past
performance, newly offered programs would not be subject to the
standards for several years until they established an operating
history. For example, an institution may seek to offer a significant
number of new programs that would not be evaluated under the new
standards for up to five years as a contingency plan in case its
current programs are eliminated or restricted under measures that would
be used in the final gainful employment regulations. We believe that
such an approach should be examined closely to determine whether those
new programs are substantially different and offer more potential
benefits to its students. With these regulations, the Department
intends to mitigate the potential for this type of response.
Accordingly, where an institution is required to obtain approval from
the Department, the Department will consider the following factors when
reviewing an institution's notice: (1) The institution's demonstrated
financial responsibility and administrative capability in operating its
existing programs, (2) whether the additional educational program is
one of several new programs that would replace similar programs
currently offered by the institution, as opposed to supplementing or
expanding the current programs provided by the institution, (3) whether
the number of additional educational programs being added is
inconsistent with the institution's historic program offerings, growth,
and operations, and (4) the sufficiency of the process used and
determination made by the institution to offer an additional
educational program that leads to gainful employment in a recognized
occupation. The Department may decline to approve a new program based
upon the last three of these four factors. The Department will also
take into consideration other publicly available data, including data
from the U.S. Department of Labor, about the job prospects for
individuals that would complete the new programs.
If the Department denies an application from an institution to
offer an additional program under Sec. 600.10(c), the Department will
explain in the denial how the institution failed to demonstrate the new
program would likely lead to gainful employment in a recognized
occupation. The institution will be permitted to respond to the
concerns raised by the Department in the denial and request
reconsideration of the denial. We also note that even if the new
program is not yet approved or is denied, an institution may still
offer the program but students would be ineligible to receive title IV,
HEA program funds to pay the costs of attendance associated with that
program. In the case of a denial, the institution could later seek to
add the program and provide additional information about students who
completed it.
We intend to establish performance-based requirements in subsequent
regulations early in 2011 for approving additional programs. Until
those subsequent regulations take effect, institutions must comply with
the interim requirements in these regulations. As discussed elsewhere
in this preamble, we will continue to consider whether to exclude
certain programs from these approval requirements as a part of our
consideration of the remaining issues presented in the gainful
employment NPRM. Toward that end, we are continuing to consider
carefully the suggestions to exclude postbaccalaureate certificate
programs from the new program approval process and ways to provide a
more flexible approach for approving programs in new and emerging
fields. In addition, we intend to address the questions raised on
employer affirmations and enrollment projections in the context of the
subsequent final regulations for gainful employment in early 2011.
As described earlier, we also intend to implement administrative
procedures that mitigate the burden on institutions and the Department
in submitting and reviewing information for new programs. For example,
the Department may allow an institution to combine several new programs
in one notification if the institution used the same, or similar,
processes in developing those programs. Further, an eligible
institution may submit a notice for a new program that will be offered
at multiple locations of the institution.
A description of the additional programs proposed regulations, the
reasons for adopting them, and an analysis of the regulations' effects
was presented in the NPRM published on July 26, 2010. This updated
Regulatory Impact Analysis describes changes considered in response to
comments received about the additional programs provision.
[[Page 66672]]
Regulatory Alternatives Considered
In the NPRM published on July 26, 2010, the Department proposed
requirements for institutions to establish additional programs subject
to the gainful employment regulations. In that regard, the NPRM
provided that, as part of an institution's application to establish an
additional program, the institution would need to provide (1) the
projected enrollment for the program for the next five years for each
location of the institution that will offer the additional program, (2)
documentation from employers not affiliated with the institution that
the program's curriculum aligns with recognized occupations at those
employers' businesses and that there are projected job vacancies or
expected demand for those occupations at those businesses, and (3) if
the additional program constitutes a substantive change, documentation
of the approval of the substantive change from its accrediting agency.
As described elsewhere in this preamble, we received a range of
comments related to this provision. Some were supportive of the
proposed regulations but had specific recommendations for the form and
content of the affirmations from unaffiliated employers. Other
commenters requested clarification about how many affirmations would be
needed and what is considered a local employer and how a local employer
would be determined with respect to online programs or programs whose
students pursue jobs nationally. Commenters also asked us to clarify
how the proposed requirement that the employer be unaffiliated with the
institution would affect the valuable internship and externship
relationships between institutions and employers, and what metrics
would be used to align an employer's projected needs to the size of the
program. Other commenters expressed concern that the proposed
provisions would stifle an institution's ability to establish
innovative programs for emerging fields in anticipation of future job
opportunities. Several commenters suggested that the proposed provision
interfered with curriculum development and internal decisions of
schools and would undermine the close relationships programs subject to
the proposed gainful employment regulations develop with local
employers.
In general, we agree with commenters who suggested that the program
approval process for additional programs should apply only to an
institution with programs in a restricted or ineligible status. This
would relieve the burden on institutions and the Department, and would
allow institutions with a record of strong performance to establish new
programs more expediently. However, we are not addressing in these
regulations the standards that will be used to gauge the performance of
gainful employment programs and the consequences of not meeting those
standards. These regulations address in only a very limited manner the
provisions relating to the Secretary's approval of additional
educational programs. Modifications to make the approval process for
additional programs performance based will be addressed in subsequent
regulations.
Under the requirements established in these regulations, the
Department will instead rely on a notice from the institution submitted
at least 90 days prior to the time when the institution plans to offer
the new program that provides a narrative explanation of why and how
the new program was developed. Specifically, an institution must
describe how it determined the need for the new program and how the
program was designed to meet local market needs, or for an online
program, regional or national market needs by, for example, consulting
BLS data or State labor data systems or consulting with State workforce
agencies. The institution also must describe how the program was
reviewed or approved by, or developed in conjunction with, business
advisory committees, program integrity boards, public or private
oversight or regulatory agencies, and businesses that would likely
employ graduates of the program. Additionally, the institution must
include in its notice documentation that the program has been approved
by its accrediting agency or is otherwise included in the institution's
accreditation by its accrediting agency, or comparable documentation if
the institution is a public postsecondary vocational institution
approved by a recognized State agency for the approval of public
postsecondary vocational education in lieu of accreditation. The notice
from an institution should also include any information that describes
how the program would be offered in connection with, or in response to,
an initiative by a governmental entity, such as the oral health program
with the Federal support described in the comments. Additionally, an
institution must include in its notice a description of any wage
analysis it may have performed, including any consideration of BLS wage
data that is related to the new program. Based on this information, the
Department will determine whether approval is required, and if required
the Department will consider the notice as an application. Under the
regulations, an institution does not have to apply for approval to add
a program under Sec. 600.20 unless (a) it has been directed to do so
by the Department under Sec. 600.20(c)(5), (b) it is a direct
assessment programs under 34 CFR 668.10, or (c) it is required to do so
by a provision in its Program Participation Agreement.
As discussed in the Paperwork Reduction Act of 1995 section of this
preamble, the Department estimates that institutions will submit
notifications for approximately 914 new nondegree programs and 1,005
new degree programs annually under the process set forth in these final
regulations, or a total of 5,757 over a three-year period.
The effect of these changes on the cost estimates prepared for and
discussed in the Regulatory Impact Analysis of the NPRM is discussed in
the Costs section of this Regulatory Impact Analysis.
Benefits
We believe the approach set forth in these regulations, based on a
program development process articulated by commenters representing both
the public and private sectors, provides some assurance that new
gainful employment programs are needed and responsive to student and
employer needs. This provision results in no net costs to the
government over 2011-2015. The administrative expenses associated with
the approval process will be covered by the Department's existing
discretionary funds.
Costs
The process established by these regulations is based on
institutional practices described in comments received from
representatives of public and private institutions. Accordingly, many
entities wishing to continue to participate in the title IV, HEA
programs have already absorbed many of the administrative costs related
to implementing these regulations, and additional costs would primarily
be due to documenting the program development process. Other
institutions may have to establish a program development process, but
the regulations allow flexibility in meeting the core requirements.
In assessing the potential impact of these regulations, the
Department recognizes that the provision may increase workload for some
program participants. This additional workload is discussed in more
detail under the
[[Page 66673]]
Paperwork Reduction Act of 1995 section of this preamble. Additional
workload would normally be expected to result in estimated costs
associated with either the hiring of additional employees or
opportunity costs related to the reassignment of existing staff from
other activities. In total, these changes are estimated to increase
burden on entities participating in the Federal Student Assistance
programs by 3,591 hours.
As detailed in the Paperwork Reduction Act of 1995 section of this
preamble, the additional paperwork burden is attributable to the
process of documenting and submitting a description of how the
institution determined to develop a new program. We estimate that this
process would take institutions 3,591 hours and the costs would be
$91,032 under information collection 1845-0012. In response to comments
that the regulations would be costly, we reviewed the wage rates for
more recent information and the share of work performed by office
workers and management and professional staff. This increased the wage
rate for gainful employment related matters from $20.71 to $25.35.
Because data underlying many of these burden estimates was limited,
in the NPRM, the Department requested comments and supporting
information for use in developing more robust estimates. In particular,
we asked institutions to provide detailed data on actual staffing and
system costs associated with implementing the regulations regarding
additional programs. Some commenters believed the estimate of 650 new
programs annually was low and suggested 6,500 per year was a more
reasonable figure. The Department reviewed internal data sources and
estimated that 1,919 programs would be reviewed annually, or a total of
5,757 over a three-year period. As discussed above, we also reviewed
the wage rates for more recent data and the share of work allocated to
managerial and professional staff.
Net Budget Impacts
The regulations are estimated to have a net budget impact of $0.0
million over FY 2011-2015. Consistent with the requirements of the
Credit Reform Act of 1990, budget cost estimates for the student loan
programs reflect the estimated net present value of all future non-
administrative Federal costs associated with a cohort of loans. (A
cohort reflects all loans originated in a given fiscal year.)
These estimates were developed using the Office of Management and
Budget's Credit Subsidy Calculator. This calculator will also be used
for reestimates of prior-year costs, which will be performed each year
beginning in FY 2009. The OMB calculator takes projected future cash
flows from the Department's student loan cost estimation model and
produces discounted subsidy rates reflecting the net present value of
all future Federal costs associated with awards made in a given fiscal
year. Values are calculated using a ``basket of zeros'' methodology
under which each cash flow is discounted using the interest rate of a
zero-coupon Treasury bond with the same maturity as that cash flow. To
ensure comparability across programs, this methodology is incorporated
into the calculator and used government-wide to develop estimates of
the Federal cost of credit programs. Accordingly, the Department
believes it is the appropriate methodology to use in developing
estimates for these regulations. That said, however, in developing the
following Accounting Statement, the Department consulted with OMB on
how to integrate our discounting methodology with the discounting
methodology traditionally used in developing regulatory impact
analyses.
Absent evidence on the impact of these regulations on student
behavior, budget cost estimates were based on behavior as reflected in
various Department data sets and longitudinal surveys listed under
Assumptions, Limitations, and Data Sources. Program cost estimates were
generated by running projected cash flows related to each provision
through the Department's student loan cost estimation model. Student
loan cost estimates are developed across five risk categories: Two-year
and less proprietary institutions; two-year and less public and private
nonprofit institutions; freshmen and sophomores at four-year
institutions; juniors and seniors at four-year institutions; and
graduate students. Risk categories have separate assumptions based on
the historical pattern of behavior--for example, the likelihood of
default or the likelihood to use statutory deferment or discharge
benefits--of borrowers in each category.
The Department estimates no budgetary impact for these regulations
as there is no data indicating that the provisions will have any impact
on the volume or composition of Federal student aid programs.
Assumptions, Limitations, and Data Sources
Impact estimates provided in the preceding section reflect a
prestatutory baseline in which the Higher Education Opportunity Act
changes implemented in these regulations do not exist. Costs have been
quantified for five years.
In developing these estimates, a range of data sources were used,
including data from the National Student Loan Data System, and
operational and financial data from Department of Education systems.
Data from other sources, such as the U.S. Census Bureau or the U.S.
Bureau of Labor Statistics, were also used. Data on administrative
burden at participating institutions are extremely limited.
Elsewhere in this SUPPLEMENTARY INFORMATION section we identify and
explain burdens specifically associated with information collection
requirements. See the heading Paperwork Reduction Act of 1995.
Accounting Statement
As required by OMB Circular A-4 (available at
http://www.Whitehouse.gov/omb/Circulars/a004/a-4.pdf), in Table 2, we
have prepared an accounting statement showing the classification of the
estimated expenditures associated with the provisions of these
regulations. This table provides our best estimate of the changes in
Federal student aid payments as a result of these regulations.
Expenditures are classified as transfers from the Federal government to
student loan borrowers.
Table 1--Accounting Statement: Classification of Estimated Expenditures
[In millions]
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Costs............. $0.1.
Cost of compliance with
paperwork requirements.
Annualized Monetized Transfers......... $0.
[[Page 66674]]
From Whom To Whom?..................... Federal Government To Student
Loan Borrowers.
------------------------------------------------------------------------
Regulatory Flexibility Act Certification
The Secretary certifies that these regulations would not have a
significant economic impact on a substantial number of small entities.
These regulations would affect institutions that participate in title
IV, HEA programs and loan borrowers. The definition of ``small entity''
in the Regulatory Flexibility Act encompasses ``small businesses,''
``small organizations,'' and ``small governmental jurisdictions.'' The
definition of ``small business'' comes from the definition of ``small
business concern'' under section 3 of the Small Business Act as well as
regulations issued by the U.S. Small Business Administration (SBA). The
SBA defines a ``small business concern'' as one that is ``organized for
profit; has a place of business in the U.S.; operates primarily within
the U.S. or makes a significant contribution to the U.S. economy
through payment of taxes or use of American products, materials or
labor * * *'' ``Small organizations,'' are further defined as any
``not-for-profit enterprise that is independently owned and operated
and not dominant in its field.'' The definition of ``small entity''
also includes ``small governmental jurisdictions,'' which includes
``school districts with a population less than 50,000.''
Data from the Integrated Postsecondary Education Data System
(IPEDS) indicate that roughly 4,379 institutions participating in the
Federal student assistance programs meet the definition of ``small
entities.'' The following table provides the distribution of
institutions and students by revenue category and institutional
control.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Public Private NFP Proprietary Tribal
-------------------------------------------------------------------------------------------------------
Revenue category Number of Number of Number of Number of Number of Number of Number of Number of
schools students schools students schools students schools students
--------------------------------------------------------------------------------------------------------------------------------------------------------
$0 to $500,000.................................. 43 2,124 103 13,208 510 38,774 ........... ...........
$500,000 to $1 million.......................... 44 7,182 81 9,806 438 61,906 1 137
$1 million to $3 million........................ 98 29,332 243 65,614 745 217,715 3 555
$3 million to $5 million........................ 75 65,442 138 60,923 303 182,362 ........... ...........
$5 million to $7 million........................ 49 73,798 99 62,776 224 185,705 5 2,525
$7 million to $10 million....................... 78 129,079 110 84,659 228 235,888 9 4,935
$10 million and above........................... 1,585 18,480,000 1,067 4,312,010 383 1,793,951 14 18,065
-------------------------------------------------------------------------------------------------------
Total....................................... 1,972 18,786,957 1,841 4,608,996 2,831 2,716,301 32 26,217
--------------------------------------------------------------------------------------------------------------------------------------------------------
Approximately two-thirds of these institutions are for-profit
schools subject to these final regulations. Other affected small
institutions include small community colleges and tribally controlled
schools. For these institutions, the program development documentation
requirements imposed under the regulations could impose some new costs
as described below. The impact of the regulations on individuals is not
subject to the Regulatory Flexibility Act.
As detailed in the Paperwork Reduction Act of 1995 section of these
final regulations, the regulations will require institutions to have
and to document a process for establishing additional programs for
programs subject to the gainful employment regulations that begin
enrolling students after July 1, 2011. There are no explicit growth
limitations or employer verification requirements. The estimated total
hours, costs, and requirements applicable to small entities from these
provisions on an annual basis are 2,370 hours and $60,081, of which
$53,104 is associated with the initial submission and $10,571 is
associated with institutions that submit additional information and
work with the Department on a program subject to denial. We estimate
that approximately 350 of the institutions submitting programs in the
interim period will be small institutions, resulting in estimated
burden of 7 hours and $152 per small institution for initial submission
of material. For the smaller number of institutions with programs that
are initially rejected, there would be additional costs to submit
additional paperwork and respond to the Department's denial. We
estimate that 10 percent of submissions would go through this process,
resulting in an additional 12 hours and $302 per institution. In
response to comments that the regulations would be costly, we reviewed
the wage rates for more recent information and the share of work
performed by office workers and management and professional staff. This
increased the wage rate for gainful employment related matters from
$20.71 to $25.35.
No alternative provisions were considered that would target small
institutions with exemptions or additional time for compliance as this
provision builds on existing industry practices. In the NPRM, the
Secretary invited comments from small institutions and other affected
entities as to whether they believed the proposed changes would have a
significant economic impact on them and requested evidence to support
that belief. The comments received related to this provision were
described in the Analysis of Comments and Changes section of this
preamble.
Paperwork Reduction Act of 1995
Section 600.20(d) in these final regulations contains information
collection requirements. Under the Paperwork Reduction Act of 1995 (44
U.S.C. 3507(d)), the Department has submitted a copy of this section to
OMB for its review. However, affected parties do not have to comply
with the information collection requirements in Sec. 600.20(d) until
the Department of Education publishes in the Federal Register the
control number assigned by
[[Page 66675]]
the Office of Management and Budget (OMB) to these information
collection requirements. Publication of the control number notifies the
public that OMB has approved these information collection requirements
under the Paperwork Reduction Act of 1995.
Section 600.20--Application Procedures for Establishing,
Reestablishing, Maintaining, or Expanding Institutional Eligibility and
Certification
The final regulations require institutions to apply to the
Department for approval to add new educational programs that are
subject to the gainful employment regulations. The Department will
review the institution's narrative application that explains why and
how the new program was designed to meet local market needs or in the
case of an online program, regional or national market needs. The
institution's notification must indicate how the program was reviewed
or approved by, or developed in conjunction with business advisory
committees, program integrity boards, public or private oversight or
regulatory agencies, and businesses that would employ graduates of the
new program. Because this regulatory approach parallels current
practice, the only increase in burden relates to the development of the
narrative, which will be a relatively small additional effort. We did
not include the other tasks, analysis, and burden associated with
activities which, separate and apart from this collection, are already
part of an institution's due diligence in determining whether to offer
a new program.
In addition, we expect that an institution developing multiple new
programs will combine its submissions into a single notice for all the
new programs, thus reducing the burden associated with creating and
submitting the narrative.
Our estimate of increased burden is divided into two components.
The first component is the burden associated with providing notice of
nondegree programs that train students for gainful employment in a
recognized occupation. The second component is the burden associated
with providing notice of degree programs that train students for
gainful employment in a recognized occupation, consistent with Sec.
668.8(d).
We estimate that annually there will be 914 new nondegree programs
that train students for gainful employment in a recognized occupation
submitted by notice. We estimate that there will be 267 new nondegree
programs submitted by proprietary institutions and that the average
amount of time to collect the information and submit it to the
Department will be 2.5 hours per submission, which will increase burden
by 668 hours under OMB 1845-0012.
We estimate that there will be 110 new nondegree programs
submissions by private nonprofit institutions and that the average
amount of time to collect the information and submit it to the
Department will be 2.5 hours per submission, which will increase burden
by 275 hours under OMB 1845-0012.
We estimate that there will be 537 new nondegree programs
submissions by public institutions and that the average amount of time
to collect the information and submit it to the Department will be 2.5
hours per submission, which will increase burden by 1,343 hours under
OMB 1845-0012.
Collectively, we estimate that the annual burden associated with
the submission of nondegree programs will increase by 2,286 hours under
OMB 1845-0012. We estimate that annually there will be 1,005 new degree
programs that train students for gainful employment in a recognized
occupation submitted to the Department. Consistent with these final
regulations and the requirements of Sec. 668.8(d), all new degree
programs at proprietary institutions will have to submit their
narrative descriptions of why and how the institution determined to
offer their new program or programs, as well as send us documentation
of any accrediting agency or State agency approvals. We estimate that
there will be 1,005 new degree programs for which proprietary
institutions will submit notifications on an annual basis. Of the 1,005
new degree programs, we estimate that 335 will be included in
individual notifications and that the average amount of time to collect
the information and submit it to the Department will be 1.75 hours per
submission, which will increase burden by 586 hours under OMB 1845-
0012. Of the remaining 670 new degree programs, we estimate that these
will be included in grouped submissions averaging five new programs in
each group, resulting in 134 submissions (670 divided by 5). We
estimate that the average amount of time to collect this information
and submit it to the Department will be 2.25 hours per submission,
which will increase burden by 302 hours under OMB 1845-0012.
Collectively, we estimate that the annual burden associated with
the submission of notifications for new degree programs will increase
by 888 hours under OMB 1845-0012.
The final regulations in Sec. 600.20(d) also provide a process by
which the Department will contact the institution prior to denying a
new program notification to identify concerns and permit the
institution to supplement its notification with additional information.
We estimate that of the 914 new nondegree program submissions that
there will be questions regarding 92 of the new programs where those
institutions will have the opportunity to provide additional
information to the Secretary. We estimate that of the 267 new nondegree
programs submitted by proprietary institutions that in 27 of those
submissions, upon contact from the Department, the institution will
submit additional information. We estimate the collection and reporting
of the additional information, on average to take 3 hours per
submission, which will increase burden by 81 hours under OMB 1845-0012.
We estimate that of the 110 new nondegree programs submitted by
private not-for profit institutions that in 11 of those submissions,
upon contact from the Department, the institution will submit
additional information. We estimate the collection and reporting of the
additional information, on average to take 3 hours per submission,
which will increase burden by 33 hours under OMB 1845-0012.
We estimate that of the 537 new nondegree program submitted by
public institutions that in 54 of those submissions, upon contact from
the Department, the institution will submit additional information. We
estimate the collection, submission, and reporting of the additional
information, on average to take 3 hours per submission, which will
increase burden by 162 hours under OMB 1845-0012.
Collectively, we estimate that the annual burden associated with
the submission of additional information after being contacted by the
Department regarding the new nondegree programs will increase by 276
hours under OMB 1845-0012.
We estimate that of the 1,005 new degree program submissions that
there will be questions raised by the Department regarding 34
individual program submissions and that the average amount of time to
collect and to report the additional information will be 3 hours per
submission, which will increase burden by 102 hours under OMB 1845-
0012. Of the remaining 67 new degree programs that are submitted as
multiple program submissions (averaging 5 new programs per submission),
we estimate that there will be 13 multiple submissions (67 divided by
5) where questions will be raised by the Department and that the
average amount of time to collect and to report
[[Page 66676]]
the additional information will be 3 hours per submission, which will
increase burden by 39 hours under OMB 1845-0012.
Collectively, we estimate that the annual burden associated with
the submission of additional information after being contacted by the
Department regarding the new degree programs will increase by 141 hours
under OMB 1845-0012.
In total, the final regulations in Sec. 600.20(d) will increase
burden by 3,591 hours under OMB 1845-0012. [Note: The prior OMB
designation for all new degree and nondegree programs submitted for
approval was OMB 1840-0098 which was then transposed to OMB 1845-0098,
but is corrected in these final regulations to OMB 1845-0012.]
Collection of Information
----------------------------------------------------------------------------------------------------------------
Regulatory section Information collection Collection
----------------------------------------------------------------------------------------------------------------
600.20(d).......................... This regulatory section requires institutions OMB 1845-0012. The burden
to apply to the Department for approval to add will increase by 3,591
new programs that are subject to the gainful hours.
employment regulations. Institutions will
describe how the institution determined the
need for the program and how the program was
designed to meet local market needs, or for an
online program, regional or national market
needs. In addition, the institution will
describe how the program was reviewed or
approved by, or developed in conjunction with
outside entities such as, but not limited to,
business advisory committees, program
integrity boards, and public or private
oversight or regulatory agencies. The
institution will also submit under these final
regulations copies of documentation that the
program has been approved by its accrediting
agency or recognized State agency. The
Department will contact institutions before it
denies a new program and identify areas of
concern and permit the institution to
supplement its notification with additional
information.
----------------------------------------------------------------------------------------------------------------
Intergovernmental Review
These programs are not subject to Executive Order 12372 and the
regulations in 34 CFR part 79.
Assessment of Educational Impact
In accordance with section 411 of the General Education Provisions
Act, 20 U.S.C. 1221e-4, and based on our own review, we have determined
that these final regulations do not require transmission of information
that any other agency or authority of the United States gathers or
makes available.
Electronic Access to This Document
You can view this document, as well as all other documents of this
Department published in the Federal Register, in text or Adobe Portable
Document Format (PDF) on the Internet at the following site:
http://www.ed.gov/news/fedregister. To use PDF, you must have Adobe
Acrobat Reader, which is available free at this site.
Note: The official version of this document is the document
published in the Federal Register. Free Internet access to the
official edition of the Federal Register and the Code of Federal
Regulations is available on GPO Access at:
http://www.gpoaccess.gov/nara/index/html.
(Catalog of Federal Domestic Assistance: 84.007 FSEOG; 84.032
Federal Family Education Loan Program; 84.033 Federal Work-Study
Program; 84.037 Federal Perkins Loan Program; 84.063 Federal Pell
Grant Program; 84.069 LEAP; 84.268 William D. Ford Federal Direct
Loan Program; 84.376 ACG/SMART; 84.379 TEACH Grant Program)
List of Subjects in 34 CFR Part 600
Colleges and universities, Foreign relations, Grant programs--
education, Loan programs--education, Reporting and recordkeeping
requirements, Selective Service System, Student aid, Vocational
education.
Dated: October 26, 2010.
Arne Duncan,
Secretary of Education.
0
For the reasons discussed in the preamble, the Secretary amends part
600 of title 34 of the Code of Federal Regulations as follows:
0
1. The authority citation for part 600 continues to read as follows:
Authority: 20 U.S.C. 1001, 1002, 1003, 1088, 1091, 1094, 1099b,
and 1099c, unless otherwise noted.
0
2. Section 600.10(c) is revised to read as follows:
Sec. 600.10 Date, extent, duration, and consequence of eligibility.
* * * * *
(c) Subsequent additions of educational programs. (1) An eligible
institution must notify the Secretary at least 90 days before the first
day of class when it intends to add an educational program that
prepares students for gainful employment in a recognized occupation, as
provided under 34 CFR 668.8(c)(3) or (d). The institution may proceed
to offer the program described in its notice, unless the Secretary
advises the institution that the additional educational program must be
approved under Sec. 600.20(c)(1)(v). Except as provided for direct
assessment programs under 34 CFR 668.10, or pursuant to a requirement
included in an institution's Program Participation Agreement under 34
CFR 668.14, the institution does not have to apply for approval to add
any other type of educational program.
(2) For purposes of paragraph (c)(1) of this section, an additional
educational program is--
(i) A program with a Classification of Instructional Programs (CIP)
code under the taxonomy of instructional program classifications and
descriptions developed by the U.S. Department of Education's National
Center for Education Statistics that is different from any other
program offered by the institution;
(ii) A program that has the same CIP code as another program
offered by the institution but leads to a different degree or
certificate; or
(iii) A program that the institution's accrediting agency
determines to be an additional program.
(3) An institution must repay to the Secretary all HEA program
funds received by the institution for an educational program, and all
the title IV, HEA program funds received by or on behalf of students
who enrolled in that program if the institution--
(i) Fails to obtain the Secretary's approval to offer an additional
educational program that prepares students for gainful employment in a
recognized occupation as provided under paragraph (c)(1) of this
section; or
(ii) Incorrectly determines that an educational program that is not
subject to approval under paragraph (c)(1) of
[[Page 66677]]
this section is an eligible program for title IV, HEA program purposes.
* * * * *
0
3. Section 600.20 is amended by:
0
A. Revising the section heading.
0
B. Revising paragraph (c)(1)(v).
0
C. Revising paragraph (d).
0
D. In the OMB control number parenthetical that appears after paragraph
(h), removing the number ``1845-0098'' and adding, in its place, the
number ``1845-0012''.
The revisions read as follows:
Sec. 600.20 Notice and application procedures for establishing,
reestablishing, maintaining, or expanding institutional eligibility and
certification.
* * * * *
(c) * * *
(1) * * *
(v) The Secretary notifies, or has notified, the institution that
it must apply for approval of an additional educational program or a
location under Sec. 600.10(c).
* * * * *
(d) Notice and application. (1) Notice and application procedures.
(i) To satisfy the requirements of paragraphs (a), (b), and (c) of this
section, an institution must notify the Secretary of its intent to
offer an additional educational program, or provide an application to
expand its eligibility, in a format prescribed by the Secretary and
provide all the information and documentation requested by the
Secretary to make a determination of its eligibility and certification.
(ii)(A) An institution that notifies the Secretary of its intent to
offer an educational program under paragraph (c)(3) of this section
must ensure that the Secretary receives the notice described in
paragraph (d)(2) of this section at least 90 days before the first day
of class of the educational program.
(B) An institution that submits a notice in accordance with
paragraph (d)(1)(ii)(A) of this section is not required to obtain
approval to offer the additional educational program unless the
Secretary alerts the institution at least 30 days before the first day
of class that the program must be approved for title IV, HEA program
purposes. If the Secretary alerts the institution that the additional
educational program must be approved, the Secretary will treat the
notice provided about the additional educational program as an
application for that program.
(C) If an institution does not provide timely notice in accordance
with paragraph (d)(1)(ii)(A) of this section, the institution must
obtain approval of the additional educational program from the
Secretary for title IV, HEA program purposes.
(D) If an additional educational program is required to be approved
by the Secretary for title IV, HEA program purposes under paragraph
(d)(1)(ii)(B) or (C) of this section, the Secretary may grant approval,
or request further information prior to making a determination of
whether to approve or deny the additional educational program.
(E) When reviewing an application under paragraph (d)(1)(ii)(B) of
this section, the Secretary will take into consideration the following:
(1) The institution's demonstrated financial responsibility and
administrative capability in operating its existing programs.
(2) Whether the additional educational program is one of several
new programs that will replace similar programs currently provided by
the institution, as opposed to supplementing or expanding the current
programs provided by the institution.
(3) Whether the number of additional educational programs being
added is inconsistent with the institution's historic program
offerings, growth, and operations.
(4) Whether the process and determination by the institution to
offer an additional educational program that leads to gainful
employment in a recognized occupation is sufficient.
(F)(1) If the Secretary denies an application from an institution
to offer an additional educational program, the denial will be based on
the factors described in paragraphs (d)(1)(ii)(E)(2), (3), and (4) of
this section, and the Secretary will explain in the denial how the
institution failed to demonstrate that the program is likely to lead to
gainful employment in a recognized occupation.
(2) If the Secretary denies the institution's application to add an
additional educational program, the Secretary will permit the
institution to respond to the reasons for the denial and request
reconsideration of the denial.
(2) Notice format. An institution that notifies the Secretary of
its intent to offer an additional educational program under paragraph
(c)(3) of this section must at a minimum--
(i) Describe in the notice how the institution determined the need
for the program and how the program was designed to meet local market
needs, or for an online program, regional or national market needs.
This description must contain any wage analysis the institution may
have performed, including any consideration of Bureau of Labor
Statistics data related to the program;
(ii) Describe in the notice how the program was reviewed or
approved by, or developed in conjunction with, business advisory
committees, program integrity boards, public or private oversight or
regulatory agencies, and businesses that would likely employ graduates
of the program;
(iii) Submit documentation that the program has been approved by
its accrediting agency or is otherwise included in the institution's
accreditation by its accrediting agency, or comparable documentation if
the institution is a public postsecondary vocational institution
approved by a recognized State agency for the approval of public
postsecondary vocational education in lieu of accreditation; and
(iv) Provide the date of the first day of class of the new program.
* * * * *
[FR Doc. 2010-27395 Filed 10-28-10; 8:45 am]
BILLING CODE 4000-01-P